NATIONAL PULSE – Three-in-10 say they’re struggling to get by

By ANGUS REID INSTITUE

June 5, 2023 – Inflation has proven a difficult foe for the Bank of Canada to defeat. After the central bank paused for two rate cycles, economists are speculating that a rate hike may be forthcoming as soon as this week after higher-than-expected inflation numbers in May and economic growth in the first quarter of 2023.

This would spell more trouble for the more than half (54%) of renters and approaching half (45%) of mortgage-holders who say they are already finding their monthly payment for housing tough or very difficult to manage, according to new data from the non-profit Angus Reid Institute.

Interest rates have risen significantly since the beginning of 2022 as the Bank of Canada has tried to cool rising inflation. This has affected both homeowners with mortgages as the cost of borrowing has gone up and renters, many of whose landlords are affected by the interest rate increases.

Indeed, since June 2022, both renters and owners are more likely to report difficulties paying their rent or mortgage, respectively. One year ago, one-in-five (19%) renters reported it was very difficult, now one-quarter (24%) say the same. The proportion of owners who find their mortgage difficult to manage has risen from one-third (34%) to 45 per cent.

Housing affordability is just one gust among many financial headwinds faced by Canadians at the moment. The cost of groceries, too, have increased, often faster than the core inflation rate itself. As the cost of these two necessities have risen, many Canadians have used credit to keep up.

Overall consumer debt has hit a record high in Canada, and any further rate increases from the Bank of Canada would put pressure on Canadians holding credit card balances and other loans. Already, one-quarter (26%) say their debt is a major source of stress for them. Two-in-five (42%) worry about their debt in a more minor way. This figure is higher among mortgage holders (30% major source of stress, 51% minor source).

Overall, half (46%) say they are in worse shape financially than they were last June. Two-in-five (39%) are holding steady, while a handful (14%) say they are trending positively. These numbers have been fairly consistent since the beginning of 2022, when concerning inflation trends first caused the bank to act.

More Key Findings:

• The Angus Reid Institute Economic Stress Index finds one-in-five Canadians (21%) Thriving, one-quarter (26%) Comfortable, one-in-five (22%) Uncomfortable and three-in-ten (31%) Struggling. The latter figure has increased six points from June of last year.

• Both men (41%) and women (33%) between the ages of 35 and 54 are more likely than their older and younger peers to be Struggling financially.

• One third (32%) Canadians figure they will be worse off financially next year. This financial pessimism rises to nearly two-thirds (63%) among the Struggling financially.

Link to the poll here: www.angusreid.org/